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BAE Systems has predicted higher earnings this year as Britain’s defence champion continues to benefit from rising military spending, with new orders helping to propel its backlog to a record £83.6bn in 2025.
The FTSE 100 group, which builds the UK’s nuclear submarines and fighter jets as well as producing missiles and ammunition for Nato allies, reported a better than expected 12 per cent increase in full-year underlying earnings before interest and tax to £3.3bn.
Sales for the year to the end of December hit a record, rising 10 per cent to £30.7bn, on a constant currency basis.
BAE won new orders worth £36.8bn during the year, including from Turkey for Eurofighter Typhoon jets and Type 26 frigates from Norway. Free cash flow beat expectations, coming in at £2.16bn, above analyst consensus of £1.52bn.
The company’s shares rose 3.2 per cent at market open on Wednesday.
BAE, along with other defence contractors, has benefited from the rise in spending by governments around the world amid rising geopolitical threats. Shares in the company have more than doubled since the start of the war in Ukraine four years ago and have risen 15 per cent since the start of this year, with the group now valued at more than £60bn.
Charles Woodburn, chief executive, said: “In a new era of defence spending, driven by escalating security challenges, we’re well positioned to provide both the advanced conventional systems and disruptive technologies needed to protect the nations we serve now and into the future.”
The company gave a bullish outlook for the year. It expects sales to grow 7-9 per cent in 2026. Underlying earnings before interest and tax are expected to rise 9-11 per cent.
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